Regulatory compliance and efficiency enhancements drive aggressive bank technology agenda in trading and risk function
Q1 2021 hedge fund letters, conferences and more
The Ambitious Technology Agenda Of Banks
May 11, 2021 | Stamford, CT — Although COVID-19 disruptions have temporarily depressed demand for new banking products and business lines, banks are setting an ambitious technology agenda.
For banks in the United States, Europe and Asia, mounting regulatory compliance requirements and the need to improve operational efficiency are driving both an expansion of bank technology investment and an increased willingness to embrace approaches such as SaaS and cloud-based modular solutions.
“Banks’ major technology upgrades are directed at remaking the trading and risk systems that run the bank and ensure that banks are in compliance with fast-changing regulations,” says David Easthope, Senior Analyst for Coalition Greenwich Market Structure & Technology and author The Next Generation of Bank Trading and Risk Technology.
To better understand bank priorities for 2021 and beyond, Coalition Greenwich spoke to 30 senior bank executives overseeing various capital markets trading and risk functions, with a focus on their roadmaps and requirements for technology and vendor relationships. More than two-thirds of these executives say their emphasis for the next several years will be simplifying, streamlining and standardizing their IT and operations in order to scale their businesses, as opposed to launching new products and business lines.
Regulatory Compliance
Regulatory compliance is also a top priority for bank trading and risk technology groups this year and beyond. Bank executives specifically mention Fundamental Review of the Trading Book (FRTB) along with Interbank Offered Rates (IBOR) transition, Markets in Financial Instruments Directive II (MiFID II), and Uncleared Margin Rules (UMR) as the biggest challenges and highest priorities for the next few years.
“The laundry list of regulations impacting banks worldwide will require new or improved technology solutions to ensure ongoing compliance and efficiency,” says David Easthope.
Other priorities cited by bank trading and risk technology executives in the report are consolidating and streamlining trading and risk platforms, improving infrastructure for data control, continuing the advancement of electronic trading capabilities, enhancing technology strategies for trading and risk and, in one case, a wholesale digital transformation as part of a move to omnichannel banking.
About Coalition Greenwich
We are a leading global provider of data, analytics and insights to the financial services industry. We specialize in providing unique high value data and actionable information to help our clients improve their business results. The firm's data and analytics provide a clear, actionable picture of businesses and markets and are valued by boards, strategy teams and top management at leading financial services institutions.
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About CRISIL
CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the U.S., the UK, Argentina, Poland, China, Hong Kong and Singapore. It is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. For more information, visit www.crisil.com
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